Bridgewater’s finances turn positive as town runs a free cash surplus

For the first time in five years, Bridgewater’s free cash fund has money in it.

By Amy Carboneau

The Taunton Daily Gazette, Taunton, MA

By Amy Carboneau

Posted Dec. 3, 2012 at 12:01 AM
Updated Dec 3, 2012 at 3:16 AM

By Amy Carboneau

Posted Dec. 3, 2012 at 12:01 AM
Updated Dec 3, 2012 at 3:16 AM

BRIDGEWATER

» Social News

For the first time in five years, the town’s free cash fund has money in it – and local officials say that’s great news for Bridgewater finances.

“This is the indication that things are more than OK,” Town Accountant Janine Smith said Thursday. “Things are going really great.”

The state Department of Revenue this month certified that the town has $1.4 million in available funds, or “free cash,” as of July 1 of this year.

When Smith closed the books in July 2010, her first month on the job, free cash was at a minus $741,488.

“The town of Bridgewater was on the Department of Revenue watch list,” she said.

Negative free cash doesn’t mean the town has to pay any money back, Smith explained. But it means the town is spending more than it’s taking in. And for rating agencies and the state, negative numbers are a “red flag,” she said, and often lead to instability in the town.

After four years of trending steadily downhill, the reserves grew more than $2 million in the past two fiscal years.

That’s more than town auditor Tony Roselli expected.

Roselli, of Woburn-based Roselli, Clark & Associates, said when he first came on board, “there was a lot of things broken, a lot of problems.” But the town “latched on” to his advice, he said Thursday.

“So things are looking really good from a financial perspective,” he said. “I’m happy.”

The town accomplished it by low-balling its predicted revenue for the following year and then writing a lean budget based on that conservative figure. Then, when the town actually brought in more revenue, the extra became free cash.

“So for 2011 and 2012, that’s what the budget process was made up of,” Smith said.

With free cash now in the black, Smith said, the town can use those funds for any legal purpose, from purchasing new vehicles to adding staff.

“It’s great news for the town,” added Tim Fitzgibbons, chairman of the Town Council Budget and Finance Committee.

Fitzgibbons credited collaboration between the council, the town manager and the department heads in working toward a more conservative budget that allows the town to “live within our means.”

The next step, he added, should be to add money to the town’s stabilization fund, which is like a savings account for the town. Experts say that number should be between 5-10 percent of the operating budget. Right now, it’s only at one percent, said Fitzgibbons.

There is a “free cash policy” before the council that would allocate 10 percent of available free cash to the town’s stabilization fund. It has yet to be voted on.

For a larger look at Bridgewater’s finances, Roselli said his full report should be ready in January, at which time the audit will be unveiled at a town council meeting.